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1、What is a Long-Term Care Partnership Program?Why is a Partnership Program important?,Endorsed by stateHelp consumers see LTC Insurance as ASSET PROTECTIONProvide relief for the Medicaid programShould assist in making long-term care sales,How do partnership plans accomplish this?It all comes down to
2、who will be responsible to pay for long-term care expenses incurred in the future.,WHO PAYS NOW?,State governors concerns today focus on rising Medicaid costsMedicaid:47 percentOut-of-pocket:21 percentMedicare:17 percentPrivate LTC insurance:10 percentOther:5 percent,Lets recap:Medicaid:Is 1965 publ
3、ic program for the poorHas now become the default payer of LTC costsApproves people either through the spend-down process or by artificial qualification,MEDICAID,Generally pays for nursing home careNursing home care is the primary driver today of increased Medicaid expensesFactor in the Boomers,and,
4、SOMETHING HAS TO GIVE,MEDICAID AND LTC,Medicaids problems are not newEvidence in early 1980s that growing LTC expenses would over-burden this public program for the poorStudy was appointed in the 1980s to investigate possible solutions to the coming crisis,RWJ FOUNDATION,The Robert Wood Johnson Foun
5、dation commissioned a study in the 1980s Report issued in 1987,RWJ FOUNDATION,The RWJ Foundation concluded that the best path for Medicaid to avoid a continued run-up in LTC expenses was to encourage consumers in the matter of personal responsibility by purchasing private LTC insurance to take the p
6、ressure off the Medicaid program.,LTC PARTNERSHIP PROGRAMS,The result of this“encouragement”were insurance plans called LTC Partnership PoliciesStates would give specific approval to LTC insurance contracts meeting certain standards,THE PARTNERSHIP PREMISE,To reduce Medicaid expenditures by delaying
7、 or eliminating the need for people to rely on MedicaidEncourage purchase of private LTC insurance by giving an incentive for the consumer to buy,CONSUMER INCENTIVE,By purchasing a LTC policy sold through the Partnership,asset protection from Medicaid would equal the amount of LTC insurance coverage
8、This amount of assets would not have to be spent down to qualify for Medicaid,EXAMPLE,Consumer buys private LTCI with a total benefit value of$250,000Consumer needs careConsumer uses LTCI firstIf they use up the entire$250,000,their application to Medicaid will allow them to keep that amount in addi
9、tion to their primary protected assets like the home and car,Based on the RWJ Study,four states decided to formally develop partnership programs and encourage consumers to buy LTC insuranceTwo distinct models emerged,PARTNERSHIP MODELS,Dollar-for-dollar:dollar value of the protected assets equals th
10、e dollar value of benefits paid by LTC insurance contractTotal Assets model:Required purchase of set minimum LTC coverage(6 years total)in exchange for complete protection of all assets,THE FOUR STATES,Connecticut:dollar-for-dollar modelCalifornia:dollar-for-dollar modelNew York:total asset protecti
11、onIndiana:hybrid of the two,WHY NO MORE STATES?,Concern that a public program was endorsing private insuranceBelieved it would increase Medicaid costs rather than reduce them by drawing attention to the programs coverageWould mostly benefit wealthier individuals who could afford the private insuranc
12、e,OBRA 1993,The Waxman AmendmentPrevented states from acquiring the Medicaid waiver necessary to activate a partnership planIowa was stopped in mid-development,WHAT HAS BEEN THE RESULT FOR THESE FOUR STATES?,Average age of partnership policyholders is between 58 and 63Majority of policyholders held
13、assets greater than$350,000(excluding home)Majority of policyholders had average monthly incomes of$5,000 or more,WHAT HAS BEEN THE RESULT FOR FOUR STATES?,Over 180,000 policies purchasedOver 2,000 claimsLess than 5 percent ultimately applied for Medicaid,CONNECTICUT,Latest year surveyed:2003-0434 p
14、ercent of purchasers of partnership plans had assets between$100,000 and$350,000Average total benefit:$247,39497 percent were first-time purchasers,NEW YORK,Now offering 4 different partnership models2 Total Asset Protection2 Dollar-for-DollarStill have minimum specified benefits,but now drawing bro
15、ader appeal,CALIFORNIA,Average age at purchase:5756 percent were female97 percent were first-time purchasers38 percent bought policies with a minimum 5-year benefit period,INDIANA,Hybrid model:Total asset protection if purchase made for benefit amount of$188,000 or greaterDollar for dollar protectio
16、n for policies less than$188,000,DEFICIT REDUCTION ACT OF 2005,1993 ban on LTC Partnership Programs liftedandChanges made to Medicaid eligibility,DEFICIT REDUCTION ACT OF 2005,LTC goals were:Make it more difficult to qualify for Medicaid program artificially,andEncourage people to look to another so
17、urce for LTC expense funding,DRA 05:NEW MEDICAID RULES,All transfers must occur 5 years prior to Medicaid application datePenalty period now imposed from the date of Medicaid eligibility not the date of the actual transfer,ASSET TRANSFERS,Medicaid application date:August 1,2006Look-back window:retro
18、 to August 1,2001Transfer of$180,000 made February 1,2002Penalty!$180,000 divided by$3,300=54 monthsPenalty used to be measured from date of transfer 2/1/02+54 months=eligibility on 8/1/06NOW Penalty applied as of 8/1/06 eligibility will be on 2/1/2011,NEW MEDICAID RULES,Medicaid application can now
19、 be denied for person with home equity greater than$500,000($750,000 in some states)Annuities are now assets.Policyowners state of residence now required to be listed as a remainder beneficiary.,NEW PARTNERSHIP ACTIVITY,Now there will be more than FOUR statesFederal Medicaid waivers will be grantedE
20、ach state that wants to offer LTC partnership policies must file a state plan amendment with the Department of HHSUnless related to this process,no additional state legislation is necessary,STATE PLAN AMENDMENT,Policies cover state residentsPolicies are tax-qualifiedPolicies adhere to NAIC provision
21、sPolicies contain specified inflation optionsLTC agents have appropriate trainingInsurers subject to reporting requirements,WHOS READY TO GO?,Colorado MassachusettsFlorida Michigan Oklahoma Georgia Minnesota PennsylvaniaIdaho Missouri Rhode IslandIllinois Montana South DakotaIowa Nebraska VirginiaMaryland New Jersey Washington,GRANDFATHERED,ConnecticutCaliforniaNew YorkIndiana,CMS TEMPLATE,Clarification of:Inflation protection(ages 61+)Exchanges vs.grandfatheringReciprocityAgent training for certificationUniformity,
